Ronnie05's Blog

Indian Telecom Story (Part XXIV): January Round Up!

Posted in Industry updates by Manas Ganguly on January 31, 2010

The 3G licenses are now transcending into an area of pathetic governance. On the other hand record subscriber numbers donot seem to drive profits and the industry is anticipating a M&A policy from the Department of Telecom.

The 3G licence drama continues in the Telecom industry in India. The latest is that the spectrum auction could be pushed as far back as September 2010. The original date of the spectrum option was calendar year 2007 and its been delayed 30 months since. The delays have trivialized matters to such an extent that many industry watchers are recommending that India directly graduates to 4G and bypasses 3G such that consumers are able to benefit from 4G as a technology and stakeholders in the Telecom system do-not sink monies in 3G which would be outdated by the time it hits the ground. That the exchequer is loosing out on Rs.35000 crore as license fee which could have powered the economy elsewhere is a completely different thing.

The latest delay of 3G comes after the law ministry warned the government of heavy financial penalties if it auctions 3G airwaves not in its possession. This ten will most likely lead to most likely leading to another delay in the sale of spectrum for high-end telecom services such as ultra-fast internet on mobiles. under the terms of a telecom department proposal, the winning bidders can ask for their money back plus interest if they are not handed the 3G spectrum by the end of this year. If the process is completed before the end of the year in December, phone companies will be able to roll out 3G services only by the middle of next year.

Earlier in the month of January 2010, a panel of ministers headed by Finance minister, Mr Pranab Mukherjee reiterated the government’s commitment to auction four slots of radio bandwidth, in addition to the one already allotted to state-owned telcos BSNL & MTNL, before April, hoping to raise about Rs 30,000 crore. The telecom department and the armed forces are involved in a standoff over control of a large chunk of 3G airwaves. The defence ministry has said that it will free up 5 Mhz of 3G spectrum, equivalent to one slot, in July and a similar amount in August 2010. But the defence ministry is complaining that the telecom department is not keeping its side of the bargain. Work is yet to start, it says, on building an alternative fibre optic network cable for the armed forces.

For consumers, a further delay will mean they will have to wait other year-and-a-half for high-end services such as ultra-fast internet, video-conferencing, interactive gaming, mobile TV and high-speed downloads of movie and music clips on mobile phones.

The Indian Telecom markets registered another record shattering growth in the month of December 2009 with total additions of 19.10 million connections with 12.52 GSM connections. The total number of wireless connections was 525.15 million by the end of the year 2010.

In the mean time, Airtel, Indias largest Telecom operator beat analyst expectations and still returned a -1% drop in revenue and -5% drop in profits. Understandly, this was the effect of the hyper competition that the Indian markets have been subject to for the last 6 months. Elsewhere, Idea, India’s fifth largest Telecom Operator, returned better results than Airtel on the 3Q,2009, reporting increase in revenues but dip in profits. Indian Telcos telcos are streamlining their cost structure to minimise the impact of the tariff war. The broad consensus is that this bruising tarriff battle is likely to continue for the next 2 years and broadly cost $2-3 bn per operator before consolidation would start kicking in. Speaking on the sidelines of World Economic Forum , Sunil Bharti Mittal, chairman Bharti Enterprises has indicated no business viability with 13 operators and has also highlighted the need of a M&A policy which would facilitate consolidation.

The Indian Telecom story over 23 posts captures the state of Indian Telecom sector and offers a snapshot into the sector. To read earlier posts click here:

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  1. […] the original post here: Indian Telecom Story (Part XXIV): January Round Up! « Ronnie05's Blog Categories: Telecom Tags: back-as-september, calendar-year, its-been, licence-drama, […]

  2. […] See more here: Indian Telecom Story (Part XXIV): January Round Up! […]

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